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Natalka [10]
3 years ago
8

Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year

1, $270,000 in years 2 through 4, and $200,000 in year 5. The discount rate that your firm uses for projects of this type is 11.25%. What is the investment's net present value
Business
1 answer:
stich3 [128]3 years ago
5 0

Based on the information given the investment's net present value is $192,369.06.

Using this formula

Net Present Value(NPV)=-Initial cost+ Cash flow during time period/(Discount rate+ Cash flow time)

Let plug in the formula

NPV=-920,000+450,000÷(1+0.1125)^1+270,000÷(1+0.1125)^2+270,000÷(1+0.1125)^3+200,000÷(1+0.1125)^4

NPV=-920,000+450,000÷(1.1125)^1+270,000÷(1.1125)^2+270,000÷(1.1125)^3+200,000÷(1.1125)^4

NPV=$192,369.06

Inconclusion the investment's net present value is $192,369.06.

Learn more here:<em>brainly.com/question/13451251</em>

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Two types of costs that each combine fixed cost and variable cost behaviors are: a. capacity and incremental costs. b. semi-fixe
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When a company employs statistical tools to reduce the likelihood of a product recall, this best represents what type of decisio
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Quality best represents to reduce the likelihood of a product recall

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7 0
1 year ago
Tutak Industries issued a $1,000 face value bond a number of years ago that will mature in eight years. Similar bonds are yieldi
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Answer: The coupon rate is 13%

Explanation:

We would first calculate the Coupon Payment and then later using the coupon payment we would compute the Coupon rate.

PV = \frac{FV}{(1+r)^{N} } + A [[\frac{1-\frac{1}{(1+r)^{N} } }{r} ]]

Where,

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r = 8%

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